The world's biggest smartphone market could soon become really tough for Apple, Samsung, HTC and others

posted by Chris P. / Aug 20, 2014, 4:51 AM

A new policy, shoved down the throats of the three major carriers in the world's largest smartphone market, China, may adversely affect popular brands like Apple, Samsung, HTC, and create room for a shift in market share.

Indeed, what is likely the most important market on the planet for smartphone OEMs may prove to be even harder to penetrate than initially thought. According to Taiwan Focus, Chinese authorities are unhappy with the amount of resources the three state-owned carriers are spending on device subsidies and promotions, and is now intervening. Apparently, the big three will be forced to cut spending in these two areas by a combined 40 billion Chinese yuan (about $6.5 billion) in the coming three years.

As you can imagine, subsidies serve to mitigate the upfront cost of a number of devices that are perceived as expensive -- specifically ones from established brands that are significantly more expensive than what local companies, like Xiaomi, are charging. In fact, Xiaomi (which is already China's largest smartphone vendor) is one of the few companies who likely stand to gain from this, as it makes its dough through online retail channels and through its app store. The upstart's neighboring rivals Lenovo, Huawei, ZTE, and others, may not be as fortunate, as they rely on carriers do drive sales at least partially.

"Those handset OEMs that rely on operator channels will likely be adversely affected (in the) long term (if they do not) diversify their channel focus,” - Jasmine Lu, Morgan Stanley

Obviously, non-Android competitors, like Apple, may also be affected by the change, though Morgan Stanley analysts appear notably less worried about it, believing that its premium status will continue to ensure healthy sales.

Like it or not, this is actually big news, as the question of who wins in China could, ultimately, dictate the pace on the world stage, too. Do keep in mind that due to China's refusal to harm local companies in the interest of outsiders, it has created a market ripe for new local entrants. These companies also have an enormous room for growth, as the local market is still largely untapped, with hundreds of million customers who are yet to buy their first smartphone. By the time many of these need to branch out in regions where they may have to play fair, they're usually big enough to stand on their own. This obviously has the potential to threaten the current status quo.

FEATURED VIDEO

Posts: 161; Member since: Aug 27, 2013

posted on Aug 20, 2014, 4:59 AM 6

Posts: 3718; Member since: Nov 03, 2012

Yeah, that is really a nice picture, I kept looking at it for 5-10 secs. :)
Anyways this will help Chinese OEMs like Xiaomi, etc. to again lower the prices and I find other OEMs to forcibly lower the prices to stay and sustain in the competition.

posted on Aug 20, 2014, 10:37 AM 3

Posts: 620; Member since: Mar 13, 2012

China has been like this for decades. Look at how much kissing ass General Motors had to do to get into China. The government controls everything so you must grease the government's wheels if you want their permission to do business in china.

Posts: 1548; Member since: Jun 04, 2013

posted on Aug 20, 2014, 5:32 AM 2

Posts: 3535; Member since: Dec 21, 2012

When Xiaomi releases it's phones worldwide, the others will be forced to lower their prices. I'm afraid not many would survive through that. I have a feeling that Apple can see that and so keep high prices now so the cut wouldn't hurt that much.

Posts: 1239; Member since: Aug 05, 2014

posted on Aug 20, 2014, 9:32 AM 1

Posts: 1239; Member since: Aug 05, 2014

And if they focus on expanding their mi tv range, it will be the instant success for xiaomi and biggest threat to sony, samsung, lg etc.
49" 4K UHD Smart TV for just $640 with that gorgeous design. That's insane....

Posts: 3; Member since: Aug 20, 2014

posted on Aug 20, 2014, 5:09 AM 1

Posts: 593; Member since: Apr 10, 2012

it will be for every company as they are not providing value to their
accept apple in america (every one knows y)
as other countries they go for value for money and right chinese companies like oppo, xiaomi
they are providing real value at the price they are offering,
if go for samsung there price drops too much a 49k phone in 2 -3 months goes to 43k some time 40k they who will buy
sony, htc and nokia they ask way too much for they offer(over price products)
and honestly no company is providing real value accept chinese companies

posted on Aug 21, 2014, 5:14 AM 0

Posts: 38; Member since: Dec 28, 2013

posted on Aug 20, 2014, 5:12 AM 0

Posts: 1409; Member since: Jul 06, 2014

I'm a huge fan of XiaoMi but I never bash Lenovo and Huawei, instead I always recommend them to my customers and boost their sales in order to give XiaoMi a threat to innovate.
While HTC, is our cousins and I always recommend one m8 to those who willing to pay extra, rather than American iCrap.
Samsung fans suppose to help LG no? Why I keep seeing them fighting each other even they're same ethnic?

posted on Aug 20, 2014, 7:28 AM 2

Posts: 600; Member since: Apr 25, 2014

posted on Aug 20, 2014, 5:48 AM 2

Posts: 161; Member since: Aug 27, 2013

MANY ARE SATISFIED WITH XIAOMI ,GIONEE etc,THEY ARE ALSO WILLING TO BUY LATEST MODELS FROM THESE COMPANIES ,ACTUALLY THEY HATE LOW AND MIDRANGE PHONES FROM NON CHINEESE OEM, AM SURE CHINEESE COMPANIES WILL RULE (am also interested in testing an chineese phone)

posted on Aug 20, 2014, 6:01 AM 0

Posts: 5629; Member since: Mar 08, 2013

posted on Aug 20, 2014, 6:15 AM 5

Posts: 3260; Member since: Nov 15, 2013

lolz... today's environment is kinda politicle... apple crap bcoz is USA... xiaomi, lenovo, ZTE = garbage bcoz these are chinese... well f*** this bs... just say apple is cr@p bcoz it is cr@ap if we analyze the hardware, not bcoz of its origin... same goes to other oems

posted on Aug 20, 2014, 2:35 PM 0

Posts: 5629; Member since: Mar 08, 2013

If there are manufacturers that offer phones with high end specs on low price, it's only the Chinese manufacturers.
And that's why I like these Chinese manufacturers, they don't need us to pay so much for the advertisement fees, while the big bros like Samsung, HTC, LG, Sony, Apple etc. raise up the price like "U MAD BRO?".
So, I wish the best to these Chinese manufacturers especially Xiaomi and Huawei, they are the two of my most favorite Chinese manufacturers.

posted on Aug 20, 2014, 6:39 AM 1

Posts: 6794; Member since: Mar 29, 2012

China is fearless. WTO my foot! The biggest hypocrite are the west.
Solve your own racist issue before finger pointing on others.
Only certain board of fools will believe that an American CEO would solve their N company problem.
The joke is on them.

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.